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Star ratings stable for local banks

Fewer San Diego County banks saw their ratings go up last quarter, but stability continues to be the rule, with most ratings holding steady.

This is according to BauerFinancial Inc., a Florida-based firm that assigns star rankings to banks around the country based on quarterly performance. The most recent numbers available were from the quarter ended December 31, 2010.

During that quarter, two local banks saw an increased performance, one saw its rating fall, and the other 22 banks that the firm rated held their ground. The county did lose one bank’s headquarters when Pacific Western (Nasdaq: PACW) moved to Los Angeles. The bank, which still has branches in San Diego, retained its three star rating from the previous two quarters.

BauerFinancial’s system awards anywhere from zero to five stars to banks, based on capital ratios, profitability-loss trends, levels of delinquent loans, charge-offs, liquidity and historical data, among other criteria. Under the system, five stars equals a ranking of “superior”; four stars is “excellent”; three and a half stars is “good”; three stars is “adequate”; two is “problematic” and one is “troubled.”

In San Diego, in the most recent quarter for which numbers are available, three banks were given two stars, eight were given three, two were given three and a half, five received four stars, and four were awarded five stars.

Even for those banks that did see a change in their ratings, the difference wasn’t drastic. The two banks that saw their ratings go up each gained half a star. California Bank & Trust went from three starts to three and a half, and Silvergate Bank in La Jolla went from three and a half to four.

Bank of Southern California lost half a star, going from three and a half to three. Three was its ranking before it saw a slight uptick in the quarter ended Sept. 30, 2010.

San Diego faired better than the rest of California, where only 37.4 percent of banks were recommended, meaning they received at least four stars. More than 19 percent of the state’s banks were listed as troubled or problematic.

Still, California improved over the same time period last year, when just 32.9 percent of its banks were recommended and 24 percent were troubled or problematic.

In what could be a good sign for the nation’s economy – if not California’s - nationwide, 33 states had at least 50 percent of their banks recommended.

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